On May 6th, Elon Musk, often claiming he doesn't want to be Tesla's CEO, has been making significant changes within the company in recent weeks, emphasizing the crucial role of the CEO for its future.
He is driving transformations to reduce reliance on traditional automotive business, focusing more on robots and autonomous vehicles. Musk even threatened to take his advanced technology elsewhere if he doesn't get more control over the company.
Simultaneously, Tesla is lobbying shareholders to re-approve Musk's $56 billion compensation plan at the June shareholder meeting. This plan, initially approved in 2018, faced challenges earlier this year when a Delaware judge questioned the board's relationship with Musk and the deal's negotiation process, leading to its cancellation.
This compensation plan is closely tied to Tesla's remarkable growth in recent years. Under Musk's leadership, Tesla rapidly rose to become the first car manufacturer with a market value exceeding $1 trillion.
Musk envisions a new era for Tesla, transforming it into a vastly different company where humanoid robots and self-driving taxis, as depicted in science fiction, become a reality.
He portrays Tesla's future as a combination of Uber, Airbnb, and Amazon Web Services. Musk imagines Tesla having a fleet of Cybercabs for network taxi services, where electric cars sold to owners can also function as autonomous taxis. He also envisions deploying in-car computers to cloud services when not in use for resource sharing and efficiency.
Despite doubts in the industry about Tesla's long road to mature autonomous driving vehicles, Musk is actively strategizing for Tesla's future.
He recently stated on social media platform X, "Tesla will invest around $10 billion this year in AI training and inference, primarily for the automotive sector. Any company failing to reach this investment level and efficiency won't be able to compete in this field."
While Musk significantly increases investments in AI and focuses on developing self-driving taxis, the massive layoffs and key executive departures, especially in the automotive business, have left investors concerned about his prioritization of the next generation of consumer-driven vehicles.
Recently, Musk ordered a reduction in Tesla's Supercharger network team members and announced a slowdown in new station construction, causing a stir in the automotive industry. Following this news, Tesla's stock price dropped, accumulating a 27% decline over the past twelve months by last Friday.
Tesla has been building the Supercharger network for over a decade to address early electric car buyers' range anxiety. Many investors viewed the charging network as another growth engine for Tesla. Last year, Tesla announced opening this network to competitors like Ford.
Morgan Stanley analyst Adam Jonas estimated last year that the potential high-profit charging business could value Tesla at around $20 billion with the growth of electric vehicle sales.
However, the landscape has shifted. In the first quarter of this year, Tesla's car sales declined year-over-year for the first time since 2020. Analysts predict Tesla's overall sales may only see marginal growth this year, far from Tesla's previously forecasted 50% annual compound growth target.
Musk's actions indicate his aim to steer Tesla away from the fiercely competitive low-cost electric vehicle business towards the high-profit AI industry.
For Tesla investors, this poses a complex "Three-Body Problem," where three celestial bodies interact, making it challenging to predict their trajectories. Tesla faces intense competition in the Chinese electric vehicle market, rapid adoption of hybrid cars in the U.S., potential disruption from AI technology, and uncertainties due to Musk's volatile management style, creating a future full of uncertainties for Tesla.
Jonas, a long-term Tesla optimist, warns investors, "We see the electric vehicle industry entering a dark age of commoditization, while AI and robotics are experiencing a renaissance. We should assess where Tesla is underinvesting and where it's overinvesting from this perspective."
In essence, Musk isn't trying to navigate a clear path through obstacles but aiming to reshape the entire industry. He wrote on social media, "I'm not betting the company on this, but going all-in on self-driving is a pretty obvious move. Everything else is a variation of the horse and buggy era."
Musk believes Tesla's greatest potential lies in integrating AI into its humanoid robots named Optimus, which could serve as household assistants or factory workers.
However, this doesn't seem to excite Musk. Even before his compensation plan faced turmoil due to the judge's ruling, he expressed earlier this year that without obtaining more significant ownership (25%), he felt uneasy about engaging in AI and robotics work at Tesla. Currently, he directly holds around 13% of Tesla's shares. Therefore, Musk hopes to receive his previous compensation package and stock rewards. Of course, he can also acquire more Tesla stocks through stock buybacks.
In a recent earnings call, Musk hinted to investors that without him, Tesla might not be able to create Optimus Prime. He bluntly stated, "If I were taken by aliens tomorrow, Tesla could still manage autonomous driving, maybe a bit slower, but at least the cars could drive themselves. As for Optimus Prime or future products, that's hard to say."
